Amid fears that 250,000 more households face destitution this year, it’s more important than ever to ask why it still costs more to be poor
Many of us already know that it costs more to be poor. This ‘poverty premium’ has recently been quantified as the equivalent of 14 weeks of food shopping, and as food prices continue to rise and food insecurity becomes a reality for more households, this feels like a particularly stark image.
But that’s the price (£478 in hard cash) those living in poverty are paying just to access the same essential services as those who are better off. Energy, credit, insurance – all of these are likely to cost more for those on the financial margins.
Last week the independent think tank the National Institute for Economic and Social Research (NIESR) predicted that a further quarter of a million households face destitution as the cost of living crisis gets worse.
The disability premium
It found those on benefits need another £25 a week, as well as a one-off payment of £250 for the poorest households. Historically, this has often meant single households, and those in Black and ethnic minority communities and disabled groups.
But as the NIESR warns, this group is getting bigger – with the end of Covid protections such as eviction bans and the £20 uplift to Universal Credit playing their parts in the increase in poverty rates. And, of course, the pressing issue of rising costs.
It’s hard to find white goods anyway on a low income – even just the normal ones. I have to find a grant, and that’s hard
Clean Slate client Sophia
Clean Slate client Sophia Davis is disabled and lives on ESA and PIP. Her condition, Ehlers-Danlos syndrome, means she can’t bend to use appliances so needs special ones that can be elevated off the floor.
“I need a dishwasher and a washing machine,” she says. “But I’m in social housing, the kitchen is small and there is only room for one.” So the 29-year-old uses a launderette for her clothes – at a cost of £13 a week.
“It’s hard to find white goods anyway on a low income – even just the normal ones. I have to find a grant, and that’s hard,” she says.
As a disabled woman living in social housing, she’s effectively hit twice by the low-income penalty. Rising energy bills also hit her harder, because of the electricity she needs for her disability equipment. She’s now paying £116 a month and diverting money from her PIP, meant to help her pay for personal care, to cover everyday living costs.
“This means I am having to go without the carers I need as I can’t afford the high costs, and can’t afford the equipment and anything to help with my disability and daily life. This is because disability benefits now hardly pay enough to cover living costs due to price increases, let alone all the extra costs due to a disability, meaning going without or getting into debt.”
Sophia quotes figures from disability charity Scope that found disabled people are £580 a month worse off. And because she receives PIP and ESA, Sophia didn’t benefit from the £20 UC uplift while it lasted and says claimants on legacy benefits can feel forgotten.
Debt or denial
Sophia doesn’t consider herself to be at the mercy of the poverty premium though, as she can always put food on the table. But there’s no slack in her budget, and she lives in fear of having to replace a broken item or piece of furniture. For her, the thing that would make the biggest difference to her finances would be help with paying her energy bills. “It would help more if the government would see the effects on disabled people and provide more financial support,” she says.
“There needs to be more support for care costs and disability equipment. I can’t afford any of the disability equipment I need as it is very expensive, even for small items. I have to fight to get grants or fundraise for all the equipment to meet my needs.”
As Sophia says, the choices can boil down to either going without or borrowing just to get by. There’s a strong link between problem debt and suffering the consequences of the poverty premium.
The charity Fair by Design has found that a life or income shock is one of the main reasons people fall into problem debt. Often these events could be insurable – loss of income due to poor health or the expense of a fire or robbery. But the reality is that these protections aren’t available to everyone. A postcode deemed high risk can price a consumer out; or a comprehensive policy can be similarly prohibitive.
If I lost my house I wouldn’t be able to start again. I’d literally have what I left the house with and nothing else
Clean Slate client Gillian
Insurance is now the biggest driver of the poverty premium, according to the charity, which is dedicated to “designing out” unfairness from the system.
Gillian (not her real name) is a Clean Slate client with multiple disabilities who receives ESA. With help from her Clean Slate support worker Susan, she paid off arrears and freed up cash to take out home insurance. It was a major step forward for her – having seen the damage done to a neighbour’s flat by a house fire she used to be “terrified” about being uninsured.
The best policy
“For the first time in 14 years I’ve been able to buy household insurance,” she says. “It’s huge. If I lost my house I wouldn’t be able to start again. I’d literally have what I left the house with and nothing else. That’s quite scary.
“It sounds silly, but I just couldn’t afford home insurance. Now I’ve managed to get a really good policy which is £6 a month. Before, I was paying out so much on everything else. That £6 a month, I was like ‘do I really need it?’ But actually it’s one of the most important things. Having some security has really helped me.”
Insuring her possessions has lifted a weight from her shoulders, but for Gillian it’s not the only aspect of the poverty premium in play for her. When her five-year-old washing machine packed in, she was lucky enough to get help to replace it with a new one of her choice.
“I’d really thought the old one was energy-efficient,” she says. “Now my smart meter is green rather than constantly being in the red. I’m saving as much energy as possible because of the price increase.”
Her story highlights our constant refrain that “we don’t know what we don’t know” – and that can include that we’re paying more for being poor.
